U.S. and EU pledge new sanctions against Russia

Jul. 29, 2014 - 06:00AM
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President Obama speaks July 29 on the South Lawn of the White House as he announces new economic sanctions against key sectors of the Russian economy in the latest move to force Russian President Vladimir Putin to end his support for Ukrainian rebels. (Manuel Balce Ceneta / AP)

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The U.S. message has been clear that if Russia would not deescalate its movements and hostility in Ukraine, more sanctions would be imposed.

The Treasury Department and Department of Commerce announced Tuesday a coordinated effort with the European Union to impose more sanctions, which includes embargoed trade with Russia.

“The European Union steps today are strong, they are significant, they represent a new step for Europe, and one in which we and the Europeans have taken together,” a senior State Department administration official said during a White House conference call with reporters.

Officials said between these sanctions and sanctions set July 16, five of the six largest state-owned banks in Russia have been targeted. The targeted banks include VTB Bank, Bank of Moscow, and Russian Agricultural Bank.

“It’s a prohibition on them obtaining medium- or long-term debt financing,” a senior administration official said. “Between the action we took and the EU is taking ... they’re out of business in the longer-term debt markets.”

A defense technology firm, United Shipbuilding Corporation, is also targeted under the new sanctions.

Organization of the Petroleum Exporting Countries (OPEC) has suspended consideration for any new financing and insurance transactions in Russia, and as a result of the sanctions imposed today, the Export-Import Bank of the United States is imposing a hold on all new transactions for exports to Russia, the officials said.

“We are also going to impose export license requirements on a universe of technologies if they are to be exported or re-exported to Russian deep-water, Arctic, off-shore or shale oil production activity,” a senior Commerce Department administration official said.

The restrictions are not designed to affect current Russian oil production, but to hinder future projects, the official said.

Sanctions have been put forth since the annexation of Crimea earlier this year, but since the shoot down of Malaysian Airlines MH17, U.S. officials have expressed the need for greater costs imposed on Russia for its actions and on the Russian-backed separatist controlled areas.

Officials say military equipment, including artillery, armored vehicles and air defense equipment, departed this week from a deployment area west of Rostov-on-don; their concern also stems from an increase in Russian tanks, armored vehicles, multiple rocket launchers, artillery, air defense systems, and MREs that officials say are headed toward Russian-backed separatists in eastern Ukraine.

Because Russia continues to move forward in its deployments, the initial conditions outlined by the U.S. and European partners continues to be violated: The Russians have yet to recognize newly-elected Ukrainian President Petro Poroshenko and Ukraine’s new government, arms and material still flow over the border, the buildup of forces has not downsized, and the Russian government has not used its influence over the separatists to establish a peace process.

“In the world of sanctions, which is a complicated world ... this represents a high degree of coordination and one in which we think helps advance our common policy of sending a message to Russia about its behavior in Ukraine,” the senior State Department administration official said.

The officials said there’s still a chance Russia can redeem itself and cooperate, engaging in a new political settlement in Ukraine with the Kiev government that addresses the interest of all parties involved.

“There’s an offramp still available to Russia and to President Putin, and the basic elements of that off ramp have been clear for several weeks,” an official said. “That continues to be available to Russia, and we will continue to keep that door open.”

But the sanctions in tandem with the EU are meant to hurt.

“We always have additional targets we can add to these sanctions, but I think today’s step is a very substantial move by the United States and Europe together, and we will certainly want the impact of these sanctions to sink in.”